PF Reaction to July S&D and Crop Production Reports

Leading into the release of today's reports, new-crop corn futures were trading moderately lower and the immediate reaction was to push December futures lower on the release of the reports. However, after digesting the data, new-crop corn futures are trading near steady. A very similar story is true for new-crop soybeans, which dipped to double-digit losses on the release of the report, but are now trading near steady. Wheat futures saw a positive price reaction to the cut to new-crop carryover and are trading mostly 5 to 12 cents higher. New-crop cotton futures were higher ahead of the report, but are now trading down about 160 points on the day.

USDA's first survey-based all-wheat crop estimate came in 77 million bu. above the average pre-report trade estimate and is up from the June projection. Winter wheat production is 36 million bu. above the average pre-report trade guess and is up 34 million bu. from the June estimate. The first survey-based spring wheat crop estimate of the year is 9 million bu. above trade expectations, but is down 29 million bu. from last year.

USDA puts the all-wheat national average yield at 46.2 bu. per acre, up 1.6 bu. from the June projection and down 0.1 bu. from last year. The winter wheat national average yield is now put at 47.8 bu. per acre, up 1.7 bu. from the June estimate. The spring wheat national average yield is put at 42.9 bu. per acre, down 2.1 bu. from year-ago.

2012-13 U.S. CARRYOVER

CORN: 729 million bu.; down from June est. of 769 million bu.
-- compares to 989 million bu. in 2011-12
BEANS: 125 million bu.; unch from June est. of 125 million bu.
-- compares to 169 million bu. in 2011-12
WHEAT: 718 million bu., which was set by June 1 stocks in the Grain Stocks Report
-- compares to 743 million bu. in 2011-12
COTTON: 3.9 million bales; up from June est. of 3.6 million bales
-- compares to 3.35 million bales in 2011-12

For old-crop corn, USDA cut estimated ending stocks 40 million bu. from the June estimate, but that's 7 million bu. above the average pre-report trade estimate. On the supply side of the old-crop balance sheet, USDA increased total supplies by 10 million bu. via an increase in estimated imports to 160 million bushels. On the demand side, USDA increased estimated feed & residual use (to 4.45 billion bushels). USDA now puts the national average old-crop cash corn price at $6.75 to $7.15, unchanged from last month.

On old-crop beans, USDA left carryover unchanged from June, but the estimate is 4 million bu. above the average pre-report trade estimate. USDA made no changes on the supply or demand side of the balance sheet. USDA now puts the national average on-farm old-crop cash bean price at $14.40, up a nickel from June.

The old-crop wheat carryover was established in the June 1 Quarterly Grain Stocks Report at 718 million bushels. USDA squared the books to 718 million bu. by increasing estimated feed and residual by 28 million bu. from last month, and partially offsetting that increase with small cuts to the supply and other usage categories to result in the 28-million-bu. drop in carryover from the June S&D Report. USDA puts the national average on-farm old-crop cash wheat price at $7.77, down 3 cents from last month.

Old-crop cotton carryover is up 300,000 bales from June. No changes were made on the supply side of the balance sheet and estimated exports were cut 300,000 bales to account for the increase in carryover. USDA now puts the national average on-farm old-crop cash cotton price at 72 cents, unchanged from last month.

2013-14 U.S. CARRYOVER

CORN: 1.959 billion bu.; up from June proj. of 1.949 billion bu.
-- trade expected 1.874 billion bu.
BEANS: 295 million bu.; up from June proj. of 265 million bu.
-- trade expected 270 million bu.
WHEAT: 576 million bu.; down from June proj. of 659 million bu.
-- trade expected 624 million bu.
COTTON: 2.9 million bales; up from June proj. of 2.6 million bales
-- trade expected 2.95 million bales

For new-crop corn, USDA plugged in the lower harvested acreage estimate from the June Acreage Report and left the yield projection unchanged from the June S&D (156.5 bu. per acre) to cut the projected corn crop 55 million bu., to 13.95 billion bushels. Total projected new-crop supplies, however, were cut by 90 million bu., which includes a smaller beginning stocks and increased imports. On the demand side, USDA cut 100 million bu. from total use with a 50-million-bu. cut to expected feed & residual use (5.15 billion bu.) and a 50-million-bu. cut to expected exports (1.25 billion bushels). USDA now puts the national average on-farm new-crop cash corn price at $4.40 to $5.20, unchanged from last month.

For new-crop soybeans, USDA plugged in the bigger harvested acreage estimate from the June Acreage Report and left the yield unchanged at a record 44.5 bu. per acre. That resulted in a 30-million-bu. increase to the projected crop (3.420 billion bushels). All of the increase in the projected crop was added to carryover. USDA also left the national average on-farm new-crop cash bean price projection unchanged from last month at $9.75 to $11.75.

For new-crop wheat, USDA cut 83 million bu. from the estimated carryover from last month. The estimate is also 48 million bu. below the average pre-report trade guess. The cut to carryover comes despite a bigger-than-expected wheat crop estimate in the Crop Production Report. Total supplies compared to the June S&D Report are up just 6 million bu. with the bigger-than-expected crop mostly offset by the smaller beginning stocks. On the demand side, USDA increased estimated exports 100 million bu. (to 1.075 billion bushels). USDA also cut estimated feed & residual use by 10 million bu., to 280 million bushels. Seed use was also cut by 1 million bu., to 73 million bushels. USDA now puts the national average on-farm new-crop cash wheat price at $6.45 to $7.75, up 20 cents on both ends of the range.

On new-crop cotton, USDA increased projected carryover by 300,000 bales from June. Beginning stocks are up 300,000 bales from June, resulting in the increase to carryover. No other changes were made to the new-crop supply or demand projections. However, there are some significant changes in the projections for the crop. The total crop size is unchanged from June at 13.5 million bales, but USDA increased cotton plantings by 220,000 acres; cut harvested cotton acres by 300,000 acres; and increased the national average yield projection by 31 lbs. per acre, to 831 lbs. per acre. USDA now puts the national average on-farm new-crop cash cotton price at 70 cents to 90 cents, down 3 cents on both ends of the range from June.

2012-13 GLOBAL CARRYOVER

CORN: 123.57 MMT; down from June proj. of 124.31 MMT
-- 150.97 MMT for 2013-14; down from June proj. of 151.83 MMT
BEANS: 61.52 MMT; up from June proj. of 61.21 MMT
-- 74.12 MMT for 2013-14; up from June proj. of 73.69 MMT
WHEAT: 174.47 MMT; down from June proj. of 179.87 MMT
-- 172.38 MMT for 2013-14; down from June proj. of 181.25 MMT
COTTON: 85.58 mil. bales; up from June proj. of 84.93 mil. bales
-- 94.34 million bales for 2013-14; up from June proj. of 92.49 million bales

Year-to-year global wheat carryover is now projected down.

2012-13 GLOBAL PRODUCTION HIGHLIGHTS

ARGENTINA BEANS: 50.2 MMT; compares to 51.0 MMT in June
-- 53.5 MMT for 2013-14; compares to 54.5 MMT in June
BRAZIL BEANS: 82.0 MMT; compares to 82.0 MMT in June
-- 85.0 MMT for 2013-14; compares to 85.0 MMT in June
ARGENTINA WHEAT: 10.0 MMT; compares to 11.0 MMT in June
-- 13.0 MMT for 2013-14; compares to 13.0 MMT in June
AUSTRALIA WHEAT: 22.08 MMT; compares to 22.08 MMT in June
-- 25.5 MMT for 2013-14; compares to 24.5 MMT in June
CHINA WHEAT: 121.0 MMT; compares to 120.6 MMT in June
-- 121.0 MMT for 2013-14; compares to 121.0 MMT in June
CANADA WHEAT: 27.2 MMT; compares to 27.2 MMT in June
-- 29.0 MMT for 2013-14; compares to 29.0 MMT in June
EU WHEAT: 133.12 MMT; (new category, includes Croatia)
-- 138.6 MMT for 2013-14; compares to 137.44 MMT in June
RUSSIA WHEAT: 37.72 MMT; compares to 37.72 MMT in June
-- 54.0 MMT for 2013-14; compares to 54.0 MMT in June
FSU-12 WHEAT: 77.21 MMT; compares to 77.21 MMT in June
-- 102.26 MMT for 2013-14; compares to 102.59 MMT in June
CHINA CORN: 205.6 MMT; compares to 205.6 MMT in June
-- 211.0 MMT for 2013-14; compares to 212.0 MMT in June
ARGENTINA CORN: 26.5 MMT; compares to 26.5 MMT in June
-- 27.0 MMT for 2013-14; compares to 27.0 MMT in June
SOUTH AFRICA CORN: 12.2 MMT; compares to 12.2 MMT in June
-- 13.0 MMT for 2013-14; compares to 13.0 MMT in June
BRAZIL CORN: 77.0 MMT; compares to 77.0 MMT in June
-- 72.0 MMT for 2013-14; compares to 72.0 MMT in June
CHINA COTTON: 35.0 mil. bales; compares to 35.0 mil. bales in June
-- 34.0 million bales for 2013-14; compares to 34.0 million bales in June